Introduction

At a time
when Republicans and Democrats alike are clamoring to let big
business run everything from prisons to schools, nursing homes
represent the nation's longest-running experiment in
privatization-one that, after half a century, offers a graphic
portrayal of what happens when private interests are permitted to
monopolize public services.(THE
SHAME OF OUR NURSING
HOMES;
nursing homes allegedly treat patients poorly :: Millions for
investors, misery for the elderly, Eric Bates, The
Nation March 29, 1999)

This page was written in 2001 and an update
section added in 2003. Itcontains a general review of what happened
to the corporatised aged care system in the USA. The emphasis is on
corporate US chains. It is a general review and does not address the
conduct of any specific chain. The references which can be accessed
from the bottom of the page are review articles although they
sometimes use a particular chain to illustrate their points. Analysis
of the conduct of several of the major chains is available on pages
devoted to them.

Aged care and nursing homes in particular,
provide a profound insight into the way in which corporations operate
and the dynamics of the market when dealing with public funds and
citizens who are disempowered. This is because the bulk of the
funding is Medicaid and fixed at a relatively low level. Only a small
sector paid well and it was vulnerable to exploitation by the
unscrupulous. Profits from Medicaid were closely linked to the
ability to contain costs. The main cost by a long way was nursing
care and the only way to reduce costs was to reduce nurses. The
standard of care of the elderly is closely linked to staffing. This
has been known for a long long time.

Corporate chains are faced with a dilemma. To
survive in a competitive market they must decrease costs. To decrease
costs they must reduce staffing. Reducing staffing means compromising
care. This page describes how the corporations addressed this problem
and the consequences. While what would happen is obvious there is
much to learn from studying the process.

Two
Worlds

As you examine this material consider the two
groups of people we are talking about. The first are pillars of
society, the founders and senior executives of giant corporations,
the bankers and the great financial institutions of the United States
of America. This is the world of board rooms and golf clubs. They
live in a world which leads the globe and sets the ideas by which we
all live. Highly qualified and experienced in their own world. They
have no doubts about the way the world is and what is good for it.
They are enormously wealthy and this wealth is the badge of their
status in the community and the world.

The second world is the world of the elderly,
withering away physically, forgetful and often mentally clouded - the
grandparents of the USA. Part of this world are the nurses and
nursing assistants. They are among the most underpaid and overworked
citizens in the USA. Many come from the lowest strata in the USA,
often unemployed. Sometimes they have criminal histories. Also part
of this world are the ordinary citizens of the USA, the sons and
daughters of the people who live in nursing homes. These groups have
almost no credibility and no power.

These two groups share one thing in common -
an interest in the provision of aged care. To the first group it is a
source of profit. They have no doubts that the best way to provide
for the care of those who can no longer care for themselves is to ask
the market to do so. They have no doubt that they are the best people
to do so and that by making shareholders and themselves very wealthy
high standards of care will be maintained. Market reports and
analyses on the www reveal their thinking. They do not experience
aged care directly.

The second group experience aged care
directly and their experience and understanding of it differs
radically from the groups which provide aged care in the USA. They
have no interest in the profits generated in the marketplace. Their
prime interest is in the care which the elderly actually receive, and
they are far from impressed with this. They are also interested in
working conditions and are unimpressed. They believe that the market
has shortchanged the community and ruthlessly and selfishly exploited
the vulnerability of senior citizens. The evidence available, some of
it presented on this site clearly indicates that they are
correct.

There is nothing new in powerful
establishment groups setting themselves up as the arbiters of reality
and claiming to know what is best for the majority. This is the story
of history. The establishment have repeatedly created societies which
reward the establishment richly at the expense of the majority. It
has happened over and over again for thousands of years.

This is why democracy is continuously and
repeatedly challenged and must be repeatedly reaffirmed. What is
important about the corporatisation of health and aged care is the
insight it offers into the processes. It provides an opportunity to
understand and move beyond these cyclical historical phenomenon - to
control rather than be victims. That in essence is what this site
tries to do.

But building abstract theories whether in
board rooms or academic institutions is a sterile exercise. They must
be grounded in real life - what is actually happening. Much of this
site therefore describes what is happening and the different
understandings of it. We are always very uncomfortable when faced
with understandings which both seem valid yet are totally
contradictory. Being open minded is exploring these contradictions.
Being closed minded is subscribing to one and shielding oneself from
the others.

Either start by looking into the world of the
aged care chains - or else come back and look at them. Most have web
sites and they are worth exploring. Notice the images and the text -
the impressions they convey. With so much adverse publicity these
sites have been considerably toned down over the last few years and
no longer have as many photographs of impressive and well suited
executives. Accusations of fraud have taken the gloss off the more
extravagant claims. Where the sites do give details of senior staff
explore these pages and examine the credentials of the people
involved. Here are links to some corporate pages.

Nursing home
funding

"They're
going to figure a way to make a profit. They're going to do it
because that's what they have to do for their shareholders."(Businesses
react to cuts in Medicare, The Tampa Tribune November
15, 1998, by LINDSAY PETERSON)

In the USA Nursing homes have been
paid by the states under the Medicaid system on a flat rate per
patient. Federal government contributes 50%. Medicaid covers all
those unable to pay - the majority of nursing home residents.
Government's idea of increasing efficiency is to reduce the amount of
money available. The care of these nursing home residents has
consequently been poorly funded and the only way for profit oriented
groups to increase profits has been to reduce care.

The federal Medicare system until recently
paid per item of service, which made it easier for providers to make
a profit. Medicare covered medical care for the elderly. It also
covered nursing home care for a limited period of time. When it
expired the patients became less profitable Medicaid patients - and
often less desirable residents.

The most profitable residents were those who
paid their own way. Their resources were usually exhausted after a
year. They then became Medicaid patients and so less profitable.
Although care was supposedly provided to all, a tiered system
developed with Medicaid patients at the bottom. When profit became
the driving force in care they were unwanted. There were often
separate beds set aside for Medicaid residents.

Medicare and self-paying residents were at
risk of discharge or transfer to another institution when their
funding ran out. The resident's medical needs were often not
considered. "Legitimate business" decisions took precedence over the
interests of frail citizens. Vencor was for instance fined US $270,
000 for evicting 54 unfit Medicaid patients back into the community.
To them this was simply a business decision. Here is how the policy
was implemented.

Laura
Morgan's marching orders were simple. As a social worker at a
nursing home owned by Vencor Inc., she was to ensure that as many
beds as possible were filled with residents covered by generous
private insurance or by Medicare. Patients whose high-paying
benefits expired, and who thus ended up on lower-paying Medicaid,
were to be moved out as soon as possible.

One of her tasks
was smoothing the way with relatives. "I had to sit across from
family members and lie to them, manipulate them, tell
half-truths," says Ms. Morgan, who resigned in June after alerting
state authorities to the practices.
--------------------------------------
Administrators of individual nursing homes were taught to rethink
the entire admissions process with this in mind. A strategy memo
passed on to Georgia homes urged administrators to plant the seed
in the minds of prospective patients and their families that a
stay would be short-term. "Begin concept upon admission," the memo
specified, and while giving families tours of the home.

Mr. Barr, as
chief operating officer, bore down on this in a memo to regional
officials in the summer of 1997. "We determined months ago that we
did not want to admit low-paying Medicaid only patients," he
wrote. "Please let your administrators know that it's time to get
on board or leave."

At Savannah
Specialty Care Center, admissions director Hope St. Lawrence had
to prepare a fresh patient census every morning, to be faxed to
headquarters by 9:30. Then she rushed off to seek out new
admittees from hospitals, clinics and elsewhere. She screened out
as many as two out of three prospects. Just having insurance
wasn't enough, she says. The insurance had to cover extensive
therapy, and people already on Medicaid were excluded outright,
says Ms. St. Lawrence, who resigned this
summer.(Bed News: The
Business Potential Of Nursing Homes Is Elusive, Vencor Finds: Bid
for High-Paying Patients Brings Firm Headaches, And It Has to
Regroup: Medicaid Is Welcome Now; By Chris Adams and
Michael Moss, The Wall Street Journal 24 Dec. 98)

The majority of nursing home residents were
covered by Medicaid. A smaller number were covered by Medicare. A
disproportionally larger portion of corporate profit came from
Medicare. While only 10% of nursing home patients were Medicare
patients, corporate nursing homes pursued these patients aggressively
and some corporations managed to increase their Medicare numbers to
20 or even 30%.

History

More than 10
years ago, Congress heralded its passage of new laws to ensure
humane treatment of people in nursing homes. Another institution,
however, has quietly imposed its own standards:

Wall
Street.

The nursing home
industry, once a collection of individual operations, is dominated
increasingly by companies that thrive only when they take care of
shareholders. Their stocks have soared in the 1990s as Americans
have poured money into the market(Profits can
come at high costs By LINDSAY PETERSON and DOUG
STANLEY, The Tampa Tribune November 15, 1998)

Nursing home care was traditionally provided
by not for profit church and community groups as well as "Mom and
Pop" members of the community. During the 1960's and 1970's corporate
groups saw the profit potential in the frail elderly - a captive
group who could not reject the product offered. They started to buy
and run nursing homes, building empires.

In the 1980's aged care became even more of a
competitive marketplace. Corporations focussed on growth. Not for
profit and Mom and Pop nursing homes were bought up. They became cogs
in money making corporate empires. To survive not for profit groups
had to compete by adopting corporate practices, particularly their
competitive market activities. The staff, time, and money for this
was taken from care.

The focus of nursing home care shifted from
community to market - from care to profit.

In this market all for profit groups depended
on Medicare funding to boost their profits. Most misused Medicare to
build their bottom line. It seemed to be a bottomless pit filled with
money. Care was provided because it was profitable, not because it
was needed. Medicare was based on trust and this invited the
unscrupulous to overservice and defraud. The coexistence of strong
competitive profit pressures ensured that it would be.

By 1980 overservicing and Medicare fraud in
Acute care hospitals had become a serious problem. The system of
Diagnosis Related Groups (DRG's) put an end to this in the early
1980's. With DRG's a flat rate was paid for each disease process. The
sooner patients were discharged the more money was made from each DRG
payment.

A number of nursing home entrepreneurs saw
this as an a wonderful opportunity. They set up what they called
Post-Acute care (also called subacute care or step down hospitals).
This encouraged the early discharge of patients from hospitals into
nursing homes. The DRG system had not been introduced into nursing
homes. Here recuperating patients could be given a large number of
therapies to improve their recovery. All of it could be charged to
Medicare. Corporations like Sun Healthcare, Vencor and IHS built
their nursing empires on the income stream generated from Post-Acute
care and Medicare.

Mergers and
Acquisitions

The strategy
today is growth and expansion through mergers and acquisitions for
Sun and Horizon as they jockey for position for tomorrow's
consolidated long-term and subacute health care dollar. But the
growth is not only in nursing home centers and post and subacute
care units but in other ancillary services. Diversification is
also the name of this game.
------------------------------------------
Sun and Horizon/CMS are growth companies; they do not disburse
dividends. Instead, they reinvest their earnings in their
respective companies and in future growth to place themselves in
the best possible position for the next major merger, the next
large acquisition.(Watch
them grow, And grow,
Arlene Odenwald, New 'Mexico Business Journal, April. 1996 April,
1996 Vol 20; No 4; pg 15)

The market demanded profit and growth.
Successful nursing home chains in the USA have for many years
compromised care by understaffing. The larger and more successful
(e.g. Beverly), the more likely that costs had been contained by
understaffing and profits increased by enterprising Medicare billing
or Medicare fraud.

The corporate chains used this income stream
to raise loans for expansion. They built large unwieldy and
unresponsive empires. No one doubted that the income stream would be
maintained. Corporations accumulated large debts and financiers
adopted a particularly cavalier strategy in their loans to these
successful and credible organisations.

Market
control

Of 63
respondents providing financial data for both years, the biggest
companies were the least likely to post year-to-year improvements
in net income. They were also the most likely to report a
bottom-line loss.(If the first are to
be last and the meek are to inherit the earth, the post-acute-care
industry may be ahead of its time., Modern Healthcare
July 24,2000 Special Report)

There were thought to be many advantages to
size. The health system had adopted managed care, and HMO's were
looking at subacute care. Market dominance over large geographical
areas was consequently seen as particularly advantageous. HMO's would
have little option but to contract with the company which provided a
broad range of services in the areas where their members lived. They
would be in a strong bargaining position. Genesis in particular
pursued this strategy. As it turned out the HMO's were luke warm.
They did not take the bait and the strategy proved to be a costly
mistake.

Care for the aged is a highly individualised
and personal activity. It means responding humanely to the complex
and different needs resulting from a multitude of different life
times. Businessmen in their arrogance and self conceit believed that
such care could be provided by massive and inflexible corporations.
They made policies and entered into contracts in board rooms to
provide care that had little to do with the needs of the aged
thousands of miles away. Press reports and extracts on this web site
testify to the unfortunate consequences.

The argument that bigger was better is
flawed. The arguments on which it was based were made in a market
context and not in the health care context. They were not valid. Size
became an impediment.

Integration
and Diversification

The
bankruptcy filing last week by one of the nation's largest
post-acute-care companies was the sharpest nail yet in the coffin
of diversification.

Once a leading
advocate of the one-stop-shop model for post-acute care,
Integrated Health Services is now a leading example of aggressive
expansion gone sour.

The Sparks,
Md.-based company is the fourth publicly traded long-term-care
firm in five months to seek protection from creditors under a
Chapter 11 filing. All four were primarily skilled-nursing
providers, but each also pursued several lines of business
designed to complement its core operations.

And of the four,
IHS may have been the most broadly diversified.

"With nursing
homes, home care, home oxygen, rehab hospitals and the rest, (IHS)
tried to put together a post-acute network of services," said
Debra Lawson, a New York-based analyst for Salomon Smith Barney.
"That sounds good and looks good on paper but hasn't worked out in
practice."(IHS expansion
leads to Chapter 11, Modern Healthcare February 7,
2000, Monday)

Two other buzzwords related to the advantage
of size were integration and diversification. By owning Home care,
Assisted living, pharmacy, respiratory therapy, rehabilitation and a
number of other businesses they would be able to control all the
therapy given to patients and control the referrals. By integrating
these services into a network patients could be moved through the
system for maximum profit.

It was a wonderful way of wringing profits
from Medicare by playing pass the parcel. The services given to
patients were based on their profitability and unprofitable services
like basic nursing care were neglected. Staffing was skewed to meet
the potential for profit.

We are left with an image - unwashed,
unkempt, undernourished and dehydrated residents with contractures
and pressure sores lying in urine soaked beds receiving vast
quantities of "therapy". State inspectors describe the former.
Climbing Medicare costs suggest the latter.

The financial success of integration and
diversification were largely dependent on Medicare funding. When the
Medicare system was changed to stop rorting diversification became
much less profitable. It rapidly started to unwind. Corporations sold
off money losing sectors like Home care. The buzzword changed to
"core business"

It is clear that integration for profit was
not in the interest of citizens. I must make it clear that
integration for profit is very different to integration for care and
for standards. Integration has much to offer in a context where
cooperation and service replace profit and competition as the driving
forces.

Chains claim that decisions about care are
made in the homes based on patients needs. It is clear however that
policy decisions made at a corporate level because of market
priorities have a profound impact on the sort of care which citizens
receive. The behaviour of Vencor is typical. Consider also the impact
on care when Sun Healthcare responded to the altered Medicare funding
by firing 10,000 therapists.

The impact of
Diversification on
care

Nursing homes provide care for the frail
elderly - those who can no longer look after themselves. This is
their core function. This was not very profitable. Under market
pressures nursing homes became a vehicle for generating profit rather
than for care. Diversification sought to provide a large number of
more profitable services in the homes. Subacute care was the
catalyst. This was where most of the profits from diversification
came from. Nursing chains were promising to provide basic hospital
care at nursing home prices. The profits came from therapies not from
basic care.

The sicker the patients the more therapies
they could be given and the more Medicare paid. These patients often
required far more nursing care than the elderly but the nursing
complement was not increased to cope with this. Instead staffing was
downsized and deskilled.

Nursing was drawn from the care of the
elderly to the more demanding and remunerative subacute patients.
They were physically and mentally more competent and so able to
insist that their needs were met. The major complaints have not been
about the care of the subacute patients but about the neglect of the
frail elderly, people who need help toileting, feeding and drinking.

Inspectors describe malnourishment,
dehydration, unwashed patients lying for long periods in their own
waste, pressure sores and contractures. Most can be prevented by
competently trained and motivated nursing care.

Another consequence of diversification was
the attempt to provide a wide range of services to a wider range of
patients within the confines of nursing homes. Mentally unstable
patients were not excluded. There were insufficient staff and many
did not have the training to care for these patients and protect
other residents. As a consequence there have been an increasing
number of instances of resident to resident homicide and assault in
nursing homes. Many mentally compromised wanderers escaped and some
died by drowning or from cold before they were found.

Corporate Chains and
Care

In the
glossy pages of corporate literature from Florida's largest
for-profit nursing home chains there is a repeated image: a frail
person gazing with trust and gratitude at a health care worker
holding their hand.

The brochures
promise compassionate care and healthy profits for the people who
invest in their companies. But the reality of life in some of
those nursing homes is another thing - quality care and big
profits do not always go hand in hand.(Money or
mercy?, The Tampa Tribune November 15, 1998)

Without exception corporate chains claim that
they market superior care and are committed to the care of their
residents. They are angry and indignant when they are accused of
neglecting the elderly. Andrew Turner and the administrative staff
who surrounded him in Sun's headquarters believed that they were
committed to care and that they were providing it. There have been
many accusations that Sun promised superior care which it had no
intention of providing and then deliberately understaffed. In spite
of this Turner, who was offered inducements to stay but then dumped
at the insistence of Sun's creditors still promotes himself as an
expert in quality care.

Other corporations such as Genesis and
Mariner set out with the idea of providing superior and ethical care.
I believe that it is a mistake to doubt their good intentions or
their belief that they were providing superior care. The market had
other ideas and dictated the sort of care that would be provided. The
problem was that they accommodated to this.

But his
presence is felt throughout the company.

Workers, former
and current, refer to him as "Andy," as if the founder of the
behemoth company was part Friday night poker buddy, part
father-figure whom they don't want to disappoint.

Andy selected
the art that adorns the walls of the five-building headquarters
complex.

Andy wants
workers to remember why they are there, employees say.

Andy's "vision"
drives the company, current and past employees say.

"Andy is the
classic visionary," Goodman said. "It's important to Andy that we
remember that we're here to take care of frail, elderly
people."(Sun's torrid
pace lets some workers shine, burns out others, By
Leanne Potts. Albuquerque Tribune October 08, 1998)

To me the most important lesson from the
study of corporate aged care is the manner in which corporate staff
responded to the pressure of the market and indulged in socially
unacceptable conduct without experiencing discomfort.

They believed that they were providing the
sort of care that they had promised. They believed their own
marketing. They developed barriers and strategies to shield, confront
and neutralise alternate and more rational interpretations. They had
no doubts and consequently developed reasons for disregarding their
critics.

The staffing
disparity may be hurting patient care. The Daily News analysis
found for-profit homes averaged twice as many serious health and
safety violations than non-profits, and they are nearly four times
as likely to have three or more serious violations.
--------------------------
A nurse who quit working at a for-profit nursing home in Kettering
this year said poor staffing levels there left as many as 43
patients in the care of a single nurse and nurse's aide.

"I've seen
patients lying in urine overnight and stuck in wet diapers for
most of the day," she said. "And many of them are not getting
proper nutrition and hydration. You can tell just by looking at
them - their skin is dry and flaky and their eyes are sunken."(FRAIL ELDERLY
AT MERCY OF SYSTEM :: Lack of affordable choices, low staffing
lead complaints - - SERIES: WHO WILL CARE FOR THEM?,
Dayton Daily News December 5, 1999)

If we can understand how and why these people
developed their understandings and responded in the way they did then
we will be a long way down the track to developing a health and aged
system which works for citizens. There must be lessons that can be
more widely applied.

Political
Influence

But the
industry's influence doesn't end there. Its lobbyists have the
collective power to open almost any door in Tallahassee.

Former state
Sen. Curt Kiser has been retained by Genesis Eldercare Network,
and former state Sen. Ken Plante represents Vencor Inc. Democratic
fundraiser Tom Panza is a lobbyist for Integrated Health Services
Inc.(Some fear
government remains too "cozy' with industry; VICKIE
CHACHERE, The Tampa Tribune November 15, 1998)

Large corporations exert enormous influence
in the USA. Marketplace success comes with credibility, status and
influence. Nursing home leaders have been very successful and their
views become highly credible. They become associates of the powerful
on the golf course, at clubs and on committees.

Corporations cultivate politicians personally
and financially. They make large political donations to parties and
to individual member's campaigns. They spend lavishly to employ
respected politicians as lobbyists in order to get their point of
view up front when decisions are made.

No one doubts that this secures favoured
treatment. In addition they spend vast sums marketing their political
views to the public in order to frustrate poorly funded citizens
movements seeking reform. This strategy is particularly effective. It
was employed to destroy Clinton's health care reforms.

When health and aged care is under the
reformers legislative microscope which occurs frequently then health
and aged care donations exceed those from other sectors.

Corporate nursing home chains are holding
government to ransom, threatening poor care, bankruptcy and the
closure of thousands of nursing homes unless they get more money and
the laws they want are passed. Governments are faced with the
prospect of taking over, funding and administrating thousands of
homes as corporations collapse. They do not have the resources to do
so.

Regulatory
failure

Meanwhile,
the system for protecting nursing home residents is so heavily
weighted in favor of the nursing home industry that bad homes are
given repeated chances to stay in business. Shortcomings at the
state agency that regulates nursing homes have further exacerbated
the situation, records show(Money or
mercy?, The Tampa Tribune November 15, 1998)

It is clear that oversight and regulation
failed to control corporate excesses. Regulators took the side of and
shared the understandings of the large and credible corporations.
Citizens who complained met a wall of resistance. When serious
deficiencies were substantiated, full penalties were not enforced,
penalties were forgiven and fines were reduced. (See 2001
article)

Florida's
Agency for Health Care Administration, which bills itself as the
toughest nursing home regulator in the country, has failed
repeatedly to protect residents from dangerous conditions -
including some that have turned deadly.

Even when a long
pattern of neglect exists, the system to protect nursing home
residents protects the industry instead, a review of scores of
agency records has found. Often, nothing happens until there's a
crisis.(Regulation
often fails residents; VICKIE CHACHERE, The Tampa
Tribune November 15, 1998)

Ila Swan a Californian encountered these
difficulties when she complained. She saw what was happening in the
homes she visited and advised authorities without response. She
collected thousands of death certificates which revealed why the
elderly were dying. She showed that oversight was not working. A
federal inquiry by the General accounting office (GAO) confirmed her
findings and the failure of Californian authorities. Inquiries in
other states found similar problems across the USA.

Even when
the division has found violations causing death, it has not pulled
a license since XXXX became director in 1990.

XXXX and his
deputy, YYYY, were suspended last week after they reported that
they were under federal investigation. They have not returned
calls for comment. The FBI has asked former employees of the
division about possible bribery in exchange for improved
inspection reports.

XXXX replaced
Mildred Simmons, who was hired by Gov. Roy Romer to crack down on
problems and was then ousted, Simmons said, for being too
stringent.

"They hired me
to put in a strict enforcement program, so nursing homes would be
in compliance," Simmons said. "Protection of the elderly was our
prime purpose."

XXXX was
Simmons' deputy when she arrived in 1987, but he soon transferred
to another state department. "He thought I was too enforcement-
minded," Simmons said. "He was hopeful that I wouldn't last
long."

He was right.
She lasted three years. XXXX replaced her and promptly changed
policy.(STATE SLOW TO
SHUT NURSING HOMES, DESPITE VIOLATIONS LEADING TO DEATH, NO
FACILITY HAS LOST ITS LICENSE SINCE 1988, DENVER ROCKY
MOUNTAIN NEWS November 19, 2000)

A number of factors contributed to regulatory
failure.

The regulations were lax and provided
many loopholes. If a deficiency was corrected the fine fell away
even when subsequent inspections found the same or similar
problems. These were known as yoyo facilities. They repeatedly
offended, but kept patching up the particular problem before
offending again. They were never penalised.

Oversight and regulatory functions were
not publicly visible. They were seen as a drain on the budget and
had been steadily underfunded and understaffed.

There were cozy relationships between
nursing home staff and those responsible for oversight. Some
regulators were even bribed (e.g. Oklahoma).

Corporations and regulators employed
staff with the same qualifications. Staff moved from one to the
other. Regulators were regulating and inspecting future employers.
Job opportunities were at risk. Nursing home staff brought their
corporate thinking and explanations when they became regulators.
There were friendships and nursing homes were tipped off about
inspections so that they could prepare.

Regulators increasingly thought like
corporate administrators and identified with them rather than
residents when complaints were lodged. They saw it from the
corporate point of view and believed the corporate
explanations.

The chains were very credible and
genuinely believed that they provided good care. When deficiencies
were pointed out to them they became angry and attacked the
inspector. The regulator had to be on rock solid ground before
taking any action. While regulators might have friends in the
homes, senior corporate staff may have been held in some
awe.

The chains had good relationships with
politicians who appointed and fired staff. The politicians were
indebted by large donations. Corporate criticism of inspectors was
very damaging to their careers. Those, who were energetic and
perhaps occasionally made a challengeable complaint would be
targeted and likely to lose their jobs. When corporations
complained senior regulators who did their job properly were
replaced. We have recently seen the same thing happen in the
federal regulation of drugs by the PBAC in
Australia.

Corporations adopted a policy of
routinely denying the findings of regulators and attacking their
objectivity. They appealed all findings and all fines through the
multiple layers of legal process that had been set in place to
protect their rights. When they won an appeal or reduced a fine
they used this victory to attack the regulators. As a consequence
regulators ended by markedly reducing fines in order to settle the
matter.

The
number of inspectors who monitor Ohio's facilities for the aged
has dropped by a third since 1995, and overworked inspectors
are writing fewer citations.(FRAIL
ELDERLY AT MERCY OF SYSTEM :: Lack of affordable choices, low
staffing lead complaints - - SERIES: WHO WILL CARE FOR
THEM?, Dayton Daily News December 5, 1999)

As a consequence of all this there was a
process of attrition. Inspectors and regulators got little backing
from their political masters and could be stabbed in the back. When
they did their job they were involved in long and costly disputes
which drained their resources and their wills. An unstable
equilibrium developed, which allowed the nursing homes to provide the
sort of care that suited them.

From the indignant response of regulators to
the criticisms made by citizens it seems that they thought that they
were doing a good job. We should not doubt them. We have seen
corporate staff develop patterns of thinking that make what they did
legitimate. We should not expect regulators to behave differently.
Those unable to accommodate to the situation in which they found
themselves would have moved elsewhere. We are looking at a deeper
social process that operates in many contexts.

Not
for profit and government facilities

According to
the 1998 Texas Medicaid Cost Report - the latest available - daily
per-patient spending by for-profit homes on direct care and food
trailed that of their nonprofit counterparts. Nonprofits, on
average, spend almost twice as much on employee benefits and have
28 percent lower staff turnover.(Nursing
home crisis escalating; Families decry conditions; industry fights
to improve, The Dallas Morning News December 3, 2000,
Sunday)

Not for profit and to a lesser extent a small
number of government facilities have been expected to abandon their
traditional financial strategy of stretching available resources to
meet need. Instead they have been forced to compete with aggressive
and acquisitive profit driven chains. To survive they have been
forced to compromise their mission, conform to the market and compete
with the giants. Many were unable to do so or lacked the heart. They
were acquired. Sun Healthcare was known as the PACMAN of the aged
care industry.

There also
are problems among nursing homes not tied to shareholders. But
government data show the care overall is better at those
operations.

"All you have to
do is look at the nonprofits to see what's happening," said Jean
Venturino, a visiting nurse who sees patients in several area
nursing homes.

"Maria Manor,
Menorah Manor, in St. Pete, they're nonprofit. They have an ethic
of caring," Venturino said.(Profits can
come at high costs LINDSAY PETERSON and DOUG STANLEY,
The Tampa Tribune November 15, 1998)

Despite market pressures the not for profits,
who have survived have been more restrained in their application of
market principles and practices. They have not been forced to grow or
die. They have bent but have not broken completely. They have
maintained better staffing, better relations with staff and superior
care. They met the needs of the elderly without going overboard for
Medicare and postacute care. State surveyors find fewer problems in
the homes they run.

Not for profits did not build expensive
diversified and integrated empires. As a consequence they were more
flexible and less vulnerable to the changes in Medicare when they
were made. In the long run "smaller was better".

Social
Darwinism

The market was consolidating rapidly,
absorbing competitors, These included not for profit groups and
privately owned companies as well as public companies. Between 1995
and 1998 the number of publicly traded nursing home chains decreased
from 28 to 10 megacorps. Only the fittest in market terms
survived.

Growing,
growingThe steep learning curve stems from Sun's exponential growth,
which has become the stuff of legend around Albuquerque. The
growth is the primary shaper of corporate culture at the company
that owns nursing and rehabilitation homes and provides contract
care services.(Sun's torrid
pace lets some workers shine, burns out others, By
Leanne Potts. Albuquerque Tribune October 08, 1998)

Those firms that failed to maximise Medicare
income and reduce the costs of care were not competitive. They were
taken over. It was not possible for market listed chains to provide
good nursing home care, behave ethically and survive. A large income
stream was essential for survival and this could not be obtained in
this way. The future and standing of their founders was linked to the
fortunes of the companies they founded.

Individuals and groups who were able to come
to terms with their consciences prospered. Those who could not went
elsewhere. In this environment individuals with what I have called
closed minded or sociopathic personalities were successful. They
became leaders. They developed a set of complex explanatory
abstractions based on market theory. Evidence and common sense were
ignored. They carried others with them. Typical was Andrew Turner's
(Sun Healthcare) extensively
supported assertion when referring to
nurses, that there was "plenty of fat in the system".

This is well illustrated at a lower level by
the behaviour of nursing home administrators who were required to
indulge in socially unpalatable practices. They were directly
confronted by the consequences of their actions. Good administrators
who felt uncomfortable applying prescribed market principles went
elsewhere. The least suitable stayed. The quote describing Vencor's
conduct earlier also shows how socially conscious citizens resign
when they are required to indulge in unacceptable conduct.

Middle
managers suffocate in this kind of corporate culture.
--------------------------------
Overall, 40 percent of the administrators in the study, which
focused on Indiana and Michigan, changed jobs at least once a
year. The problem was worse in homes run by corporate chains than
in independently owned homes and nonprofits.
-----------------------
The administrators were driven away by a variety of things- - ,
but most dealt with not having the freedom to make their own
decisions, the demands of their supervisors and differences
between their ethics and values and those of the corporation.(Nursing home
solutions start at the top, The Tampa Tribune December
22, 1998)

To justify corporate objectives marketplace
theories built around the concept of "efficiency" were developed.
Fewer staff would not only cut costs but also improve care by
increasing efficiency. It became a matter of faith that homes were
overstaffed, overskilled and inefficient. This made the application
of corporate thinking and practices not only legitimate but
desirable.

It was an unchallenged assumption that by
increasing efficiency care was improved. That there would be no time
for the sort of empathic person to person interaction that makes
nursing home life tolerable was not considered. Financial success was
taken as proof of "quality care". They were supremely confident.
Alternate points of view and contrary evidence were not
considered.

Then at the
actual bedside I think there is fat. Why do we have to have a
registered nurse change a bedpan? That's primary care. Somebody
had a theory that this would be better care. A licensed practical
nurse or nurses aide could be used. We've gone way off the deep
end in terms of that kind of thinking. There is tons of fat in the
health care delivery system.
------------------------------------
I think we're going to see a significant reduction in costs. and I
think the role of government is going to be dramatically
diminished.(Andrew Turner
: Interview -- Andy
Turner wants the government out of health
care,
Period, New -Mexico Business Journal. April. 1996)

The political process absorbed this nonsense
and responded by reducing Medicaid funding and leaving the market to
sort out efficient care.

The market system selected for the sort of
people who were least suited to care for vulnerable citizens - people
who were not responsive to the society around them. They made more
money. It is not surprising therefore that health care is now the
major area of fraud in the USA.

Because of its complexity and the
vulnerability of the people served the success of the health and aged
care system depends on trust - i.e. when viewed as a provider of care
not as a provider of profit. The people selected cannot be trusted.
They are likely to exploit the vulnerability of others and of the
system. This is how the market works when it is strongly competitive.

Sociopathy

The
cult of AndyAs constant as the change at Sun is the influence of Sun's
founder Andrew Turner, who is the cultural touchstone for the
company's headquarters staff.(Sun's torrid
pace lets some workers shine, burns out others, By
Leanne Potts. Albuquerque Tribune October 08, 1998)

Many of the corporate founders had enormous
energy and drive. They were driven by an imperative to realise
themselves. They were supremely confident and had an inflated opinion
of their worth. Others were persuaded of their infallibility. They
were not constrained by the doubts which beset most of us. Their
adoption of a system of belief meant that it was valid and success in
the market was proof. They were charismatic and very
persuasive.

The head of
the biggest operator of nursing homes in New Mexico earned about
$8 million in salary and bonuses in three years, according to a
company document.

Robert Elkins,
chairman and chief executive officer of Integrated Health Services
of Owings Mills, Md., earned $2.3 million in salary for years 1996
through 1998, says the document filed with the Securities and
Exchange Commission.

He earned nearly
$5.8 million in bonuses for years 1996 and 1997, the document
says.

Integrated also
is making irrevocable contributions to a retirement trust for
Elkins that is to hold $23.9 million by 2001, according to the
document filed with the SEC.(Integrated
Chief Prospered Troubled Times in Nursing
Homes,Albuquerque Journal August 1, 1999, Sunday)

The abstractions these charismatic
entrepreneurs promoted were widely accepted in the marketplace -- and
by politicians. It all fitted with prevailing economic ideology. It
was what the political establishment wanted to hear. Financial
success was automatically equated with social benefit.

The beliefs had no foundation in the health
or aged care context. Reason and evidence were ignored. Steadily
mounting evidence indicated that they were highly
dysfunctional.

When applied in the health care context the
beliefs have all of the features of what I have called successful
sociopathy. By this I mean a widely supported and successful system
of thought which is manifestly inapplicable in the context in which
it is applied. It is unfair and exploits large sections of society.
In this it is no different to Fascism, Apartheid, Communism, and
other belief systems which have served society poorly.

The
New Medicare
System

In 1995, the
Governmental Accounting Office reported that Americans were being
robbed blind by the nursing-home industry. Taxpayers were being
charged for care that was never delivered, and shell companies had
been set up for the sole purpose of bilking the
government.(FOR-PROFIT
NURSING HOMES: REAL CRISIS IS RESIDENT CARE, THE
ORLANDO SENTINEL May 3, 2000)

In 1997 the US federal government finally put
a stop to the rorting of Medicare. It changed Medicare to a
capitation system like Medicaid. Both now operated in much the same
way as managed care. It rewarded nursing home chains for not
providing services, for understaffing and for under-resourcing. This
made it more difficult for not for profit groups to provide the sort
of care they would have liked. A form of rationing became necessary.
In this competitive climate the pressures dictated that rationing was
based on cost and not on need.

We took six
months to study nursing homes statewide. We found that homes run
by large, publicly traded companies had more problems, on average,
than nonprofits and homes run by for-profit companies that didn't
sell stock.
---------------------
So, what was it about having stockholders that changed a company's
behavior?

The quest for
profits seems to be the obvious answer, but it's more complicated
than that.

It's not so much
that money is siphoned away from patient care. In many cases it
is, but there's another factor. The daily life of a publicly
traded company is so intense, as stocks rise and fall minute by
minute, the questions of how to nurture workers and care for
residents fall by the wayside.(Nursing home
solutions start at the top, The Tampa Tribune December
22, 1998)

For profit groups particularly market listed
groups found a capitation system even more difficult. Not only did
they have to pay for services but they also had to generate a
continuous profit stream for their shareholders and pay off their
loans. Competitiveness and other market activities demanded that
personal and financial resources be allocated to market activities
and profit before attention was given to care. Rationing was
consequently for profit and necessary services such as home care,
which were no longer profitable were simply discontinued.

Crackdown on
fraud

Recently
there has been a great deal of public discussion of the fraud and
abuse investigations of health care companies conducted by the
Office of the Inspector General of the Department of Health and
Human Services, with significant fines and settlements handed to
companies found guilty of fraud and abuse(Banking:
financing trends in an acquisitive health care market - focus on
long-term care. Gordon, Lawrence J.; Bressler, Andrew,
Journal of Health Care Finance June 22, 1998)

Two other factors compounded the problems for
for-profit nursing homes. The first of these was a crack down on
Medicare fraud by the US government. By itself this was relatively
harmless as the chains controlled the data needed for prosecution.
They reckoned without whistleblowers.

Of the 1.5 billion fraud recovered by the US
government during the year 2000 over half came from health care fraud
and US $1.2 billion came from whistle blower initiated suits.
*

Corporate practices had so disenchanted some
employees that many had collected documents not readily available to
authorities. These whistleblowers took advantage of the Qui Tam laws
to anonymously commence actions against the corporations on behalf of
US citizens. Australia does not have Qui Tam laws.

By joining these whistleblower actions the
government acquired evidence and sometimes an undercover agent.
Corporate fraud was exposed and several of the most successful
nursing home chains were faced with fines totaling hundreds of
millions of dollars. This turned off a lucrative source of profit for
some of the chains.

Pressure from the
community

By 1997 citizens had become incensed at the
neglect of their parents. Government surveillance had been lax.
Community groups collected evidence and put pressure on government.
Ila Swan a Californian, whose mother fell foul of the corporate
system collected death certificates in that state and analysed them.
A federal government investigation confirmed her findings and showed
that oversight in California had been lax and penalties had not been
applied.

A series of investigations followed. These
revealed similar problems across the USA. Pressure was applied on
state inspectors who became much more rigorous in their inspections.
More funding was provided. Penalties were enforced and there has been
a strong move to legislate for minimum staffing levels. This is very
threatening to the bottom line and corporations strenuously oppose
this. They have lobbied strongly with considerable success.

Citizens take to the
courts

The
litigation issue is especially acute in Florida and Texas, where
strong patients' rights laws have invited a flurry of lawsuits on
behalf of nursing home residents. In Florida, the law allows for
the recovery of attorneys' fees in addition to punitive damages if
a court finds that the nursing home infringed on the rights of the
elderly resident. "Those two states started the crisis, and the
fear from nursing home operators and insurers is that this will
ripple throughout the nation," said Bourdon, who prepared the
study with Sharon C. Dubin, assistant vice president and
actuary.(Driven Out;
Brief Article --- As nursing home liability costs soar, exiting
carriers spur market crisis., Best's Review March 1,
2000)

Disenchanted by government inaction citizens
groups identified substandard nursing homes. They persuaded the
families of neglected residents to take to the courts in large
numbers. Exposure of the horrific consequences of corporate practices
in open court led the juries to award massive, and sometimes
crippling punitive penalties. Some state laws were more accommodating
than others.

This is claimed to be the only measure that
has been effective in improving staffing and care. This is because it
cut into profits. The cost cutting strategies, which were once so
successful in increasing profits are now very risky. They are costing
the companies dearly.

The corporate response has been to create a
crisis threatening bankruptcies and deteriorating care due to this
additional drain on funds. They are spending vast sums across the USA
lobbying politicians to change the law. Could it be that this is less
costly that staffing properly and providing the services senior
residents need?

The nurses
unionise

Marketplace wisdom saw nursing care as
unskilled and inefficiently provided. The human needs of the
residents were not considered and no time was allowed for this. Homes
were considered to be overstaffed even though there was no evidence
of this. Most chains followed Andrew Turner by "cutting the
fat".

The downsizing and deskilling of staff in
nursing homes and the consequent deterioration in care during the
1980's and early 1990's resulted in a progressively demoralised work
force.

One nursing
home chain, Genesis Health Ventures, has been the focus of heavy
media attention after the release of "A House of Cards," a report
issued by the Service Employees International Union (SEIU),
--------------------
In the report, Genesis - which bought 10 McKerley nursing homes in
1995 - is reported to have cut staffing levels while increasing
the number of Medicare patients, who need more complex medical
care. In the two years following the acquisition, several Genesis
facilities saw marked increases in the number of deficiencies
cited by HCFA surveyors, and a marked decrease in the nursing and
Certified Nurses Aides hours per patient per day.(The Ailing NH
NURSING Homes Industry, Business NH Magazine March 1,
2000)

Nurses lost status. Their salaries were
reduced and their perks were removed. Their efforts were not rewarded
by acknowledgment and there was no reinforcement of their sense of
mission. They were so overworked that it was no longer possible to
provide the care which patients needed.

Chains dragged the dregs of society off the
streets, gave them minimal training and put them to work for a
pittance. Many had criminal records, some for violent crimes.
Assaults and rapes of the elderly by their nursing home carers have
become a serious problem. Hidden video cameras, placed by relatives
tell the story. There is now a strong move from the community to
allow relatives to place "granny cams" in resident's rooms to monitor
their care.

Working conditions became intolerable and
trained staff went elsewhere. Whistle blowers were fired and if they
persisted pursued. There was nothing to entice nursing staff to
stay.

In a
separate dispute in August, the National Labor Relations Board
cited 106 instances of anti-union activity by the company(Beverly)
at 26 facilities in 15 states.(NURSING HOME
FIRM FACES MORE PROBLEMS; THE OWNER OF A WINTER PARK UNIT THAT
MUST BE SOLD IS ALSO UNDER FEDERAL SCRUTINY., THE
ORLANDO SENTINEL October 29, 1998)The U.S.
Court of Appeals for the Seventh Circuit has approved a
corporate-wide, cease-and-desist order by the National Labor
Relations Board against Beverly California Corp. The decision,
issued on September 13, is the culmination of two Board
proceedings consolidating numerous unfair labor practices
committed at Beverly facilities around the country that have been
litigated since 1987.CIRCUIT COURT APPROVES
NLRB CORPORATE-WIDE ORDER AGAINST NURSING HOME CHAIN
(BEVERLY), FOR IMMEDIATE RELEASE (R-2405) Friday,
September 15, 2000 202/273-1991 www.nlrb.gov

Not surprisingly the nurses joined unions, a
process bitterly resisted by corporate chains. The unions could act
for nurses, protect whistle blowers and force chains to reinstate
employees unfairly terminated. Not only could they bargain for their
members putting them on an equal footing but they could collect data
which demonstrated substandard care and publish it. Bitter and
protracted disputes between the chains and the unions
followed.

By 2000 and 2001 employers were faced with a
well-organised and angry but depleted work force. General
unemployment had fallen. No one was queuing up to wash bottoms and
empty bedpans. Regulators and the public were demanding improved
staffing.

The unions are insisting on better pay and
working conditions. They are prepared to strike. Not surprisingly
trained nurses now established in less arduous work have no interest
in coming back. There are few new recruits. Because of their past
misconduct for profit chains are having most difficulty in securing
staff and they are in serious financial trouble.

Chains do not accept that it was their own
conduct, which was largely responsible for poor care during times
when staff were available. It was their mismanagement which was
responsible for the depletion of the labour force and for the
unpopularity of aged care nursing. They now blame the shortage of
staff on the current employment situation in the marketplace. They
blame the poor care in their facilities on this. They are being
forced to pay more for staff.

Before
receiving revealing data from pollster Celinda Lake, learning
about the latest trends in caregiving from Maryann Timon of
Genesis ElderCare , and hearing about new markets in elder
care from analyst Bill Benson.
--
(describing the summit meeting agenda. Note that after
emerging from bankruptcy Genesis has spent most of 2002 and 2003
trying to unload its failed eldercare nursing home business - so
much for its "latest trends"!)(Maryland Lt.
Gov. Kathleen Kennedy Townsend Convenes National Solutions Summit
on Elder Care, U.S. Newswire May 31, 2000, Wednesday)

Corporations now sit piously on a number of
committees investigating the nursing shortage. Credibility dies hard
and they are still taken seriously. They are pressing for a system
which restores their profits. Chains claim that because of the
funding cuts they cannot afford to offer better salaries. They expect
the public purse to give them money to employ nurses and in some
states politicians have done so. Reports from 2 states suggest that
this money did not reach pay packets. It would be more economical for
government to take over the homes and run them properly.

Impact in the
marketplace

The staffing
disparity may be hurting patient care. The Daily News analysis
found for-profit homes averaged twice as many serious health and
safety violations than non-profits, and they are nearly four times
as likely to have three or more serious violations.
-------------------------------
"I've seen patients lying in urine overnight and stuck in wet
diapers for most of the day," she (nurse) said. "And many of them
are not getting proper nutrition and hydration. You can tell just
by looking at them - their skin is dry and flaky and their eyes
are sunken.(FRAIL ELDERLY
AT MERCY OF SYSTEM :: Lack of affordable choices, low staffing
lead complaints -- SERIES: WHO WILL CARE FOR THEM?,
Dayton Daily News December 5, 1999)

As a consequence of all these developments
the corporate profit stream started to fall in 1998. It continued
downward. The chains renewed their efforts to reduce costs,
particularly staff. They fired many thousands of therapists who were
no longer profitable.

The for-profit market chains were unable to
meet the demands of their shareholders or their creditors. The profit
stream needed to service their loans disappeared. Share prices
tumbled, companies were delisted from the stock exchange and most of
the spectacularly successful chains sought protection in voluntary
chapter 11 bankruptcy.

(Note:-
Add two of the largest to the list above. IHS declared bankruptcy
and Genesis entered Chapter 11 soon
after)

While not for profit groups have found it
difficult their mission of care did not include empire building and
this kept them out of debt. They were more concerned for their staff,
less likely to exploit the vulnerability of their residents and less
likely to indulge in fraud. As a consequence not for profit, and Mom
and Pop nursing homes more successfully maintained their financial
viability, their staffing and their standards of care.

In the long run "small was better". The
Merger and Acquisition mania based on the "bigger is better" concept
was a costly aberration - particularly costly for the vulnerable
elderly. They were the ultimate victims and they have paid a high
price.

Bankruptcy
and care

Some of
these problems - shrinking government payments, mostly - have
depressed nursing home stocks and piqued the concerns of the
analysts. They want signs the companies will adjust to the new
payment system to keep profits growing.

Those
expectations can be powerful(Profits can
come at high costs LINDSAY PETERSON and DOUG STANLEY,
The Tampa Tribune November 15, 1998)

Bankrupt nursing homes have assured
regulators and the public that care will not be compromised.
Government regulators have also reassured the public but at the same
time have intensified oversight at bankrupt facilities.

The corporations are caught is a catch 22
situation. Government has been kind and increased funding to some
extent. They have also been extremely benign in enforcing fraud
settlements. Chains have not even had to pay back the money they
stole. Politicians are terrified of the backlash if homes close and
thousands of frail elderly are thrown onto the streets.

Payments are nevertheless limited. The only
way to get more money is to cut costs and so services. Their
facilities have already been stripped beyond the bare minimum in
order to push profits and growth. There is little room for more. The
evidence emerging is confusing but we should expect care to
deteriorate further.

Corporations have elected to dump their
shareholders and enter chapter 11 bankruptcy. Shareholder's shares
became worthless and had no value when the companies emerged from
bankruptcy and started trading shares again. Creditors now own the
companies and have forgiven substantial debt in order not to lose
their whole investment. Assets have been sold off but they continued
to operate and most eventually traded out of bankruptcy.

Creditors appoint management that will return
the company to profit. They have no particular interest in how this
is done or the social consequences. The pressure for profit remains
and is intensified when the new company, often with a new name starts
trading on the sharemarket.

A
National Crisis
The Role of government

Nursing
homes have been squeezed for several reasons. Labor costs, which
make up 75 percent of their budgets, have soared as the economy
booms and nurses, frustrated with increased workloads, demand
higher pay or look elsewhere.
----------------------
But the biggest problem, nursing home executives say, is Medicaid.
The state-run health insurance plan for the poor pays only an
average of $130 a day per patient, about $20 per patient per day
below costs, said Scott Plumb, executive vice president of the
Massachusetts Extended Care Federation, which represents most of
the state's homes.(NURSING HOMES
SQUEEZED BY COSTS OPERATORS BLAME MEDICAID PAYMENTS
Anne Barnard, The Boston Globe April 7, 2001)

It is unfair to blame the nursing home chains
for everything that has happened. They are the product of prevailing
marketplace, economic and political belief systems - a philosophy
which places a disproportionate emphasis on small government,
privatisation, efficiency and market place competition. Claims that
better health and aged care could be provided at less cost by
increasing efficiency and reducing staffing fell on receptive ears.
Governments responded by reducing funding for health and aged care at
the same time as market pressures for growth forced corporate chains
to take more money from care. An increase in the aging population
compounded the problem.

The state funded Medicaid system which pays
for the bulk of nursing home care has been steadily eroded. It has
not kept up with increasing labour costs, nor with the increasing
needs of nursing homes which were admitting sicker patients. Both not
for profit and corporate homes have depended on the 10% of patients
paid by the much more generously funded federal Medicare system and
on wealthy self paying patients to make up the shortfall in Medicaid
funding. Corporate chains aggressively compete for these patients,
rejecting poorer Medicaid patients. This reduced the number of
economically viable patients entering not for profit homes. Their
humanitarian ethic forced them to shoulder the increased load of
Medicaid patients.

The corporate chains misused the system to
the extent that the federal government changed it in 1997. It became
much less remunerative. While this was disastrous for the heavily
indebted corporate chains, the not for profit homes also suffered.
They were no longer able to pad their Medicaid losses with the money
made from Medicare. Those that insisted on providing good care by
employing more staff, paying them better and providing improved
working conditions have fared the worst. Many are now closing.
Already poor standards of care have fallen dramatically over the last
several years.

Inquiries in state after state across the USA
have unveiled a massive crisis in care and in staffing. Billions of
dollars are needed to address the problem which is now out of hand.
Politicians, who have staked their careers on a belief in smaller
government and reduced taxes, have conditioned the electorate to
expect lower and lower taxes. For them to raise taxes to meet this
desperate need would be political suicide.

There are many inquiries and vast amounts of
hot air but only token increases in funding have been made. No
attempt has been made to address the waste of resources and the
exploitation of vulnerable people integral to a marketplace system
that takes profit from the system before it provides care.

Australian politicians have adopted a similar
philosophy. As an election approached in November 2001 they denied
mounting evidence of falling standards and understaffing. They
competed in promising the electorate lower taxes.

The rate of
payment for Medicaid from the state of Massachusetts is so
ridiculously low that we cannot remain in business,'' said Mr.
Flanagan. We went to the Department of Public Health and told them
that, but those discussions did not yield any results. This is not
something we wished to do. We have owned and operated this
facility for 22 happy years.''
--------------------
The system is broken, and it's unfortunate,'' Mr. Flanagan said.
Massachusetts Medicaid is just not paying enough for the type of
round-the-clock care that is necessary. This is a sad
day.''

Nursing
Homes Update
June 2001 to August 2003

State
inspectors wrote up the five national chains' homes for
substandard care 65 percent more often than they cited other
for--profit homes over the last four years, according to an
analysis of inspections. Many Georgia nursing homes run by smaller
chains and independent operators earn high marks from inspectors
for their care, provided in many cases on shoestring payments from
government programs. But financial reports show these homes
usually spend almost every dollar that comes in the door on care
for their residents."THE BOTTOM LINE OF
CARING: National chains earn poor inspection reports The
Atlanta Journal and Constitution July28,
2002
"The biggest insult of the whole experience has been that had this
happened in my own house, I would have been investigated. I would
have been prosecuted, and I probably would have been put in
prison," she(Barbara Becker, daughter in law of
patient)told senators.WITNESSES RECOUNT NURSING HOME ABUSE Pittsburgh
Post-Gazette (Pennsylvania) March 5, 2002

Since I wrote the overview of aged care in
2001 many of the companies have emerged from chapter 11 bankruptcy
and are making profits thanks to temporarily increased Medicare
funding in 1999 . This was intended to help companies make the
changeover to a new system with a lower profit stream. This funding
was slated to gradually decrease back towards the levels originally
calculated in 1997 starting in October 2002. Not surprisingly the
companies have made an enormous fuss about this and have mounted an
energetic public relations campaign to persuade everyone that without
more funding they can't employ more nurses and that patients will
suffer,

This has considerably blurred the issues and
the divisions between rival groups because neither the nurses, nor
the advocates for the elderly are going to oppose the allocation of
more funds to aged care. The corporations have found it easier to
organise and fund front organisations to push their cause. There is
certainly no doubt that there is an acute nursing shortage, that the
people who are employed to provide care are not properly trained nor
are they always the sort of people who will do so with dedication and
empathy. The argument for more funding to address this is clear but
whether the big chains are the people to address this is a totally
different question. Their ongoing track record of poor care and
understaffing indicates quite clearly that they are not.

Most of the business community and many of
those writing quick popular articles have drowned readers with the
corporate point of view. The governments own assessment is that
funding is adequate for the provision of care, but obviously not for
building giant corporate empires at public expense. Several other
analyses confirm this.

Thorough and comprehensive investigations:
The other major development is a whole series of thorough
investigations which have looked at what is happening. The figures
now confirm what has been obvious about the for profit market listed
chains for a long time. Care is extremely poor when compared not only
with not for profits but with privately owned companies. This failure
in care is largely due to deliberate understaffing, much of it in
order to increase profits.

These investigations include a study by an
academic, Charlene Harrington, who is a professor from California. In
depth state newspaper studies have been done by Phillip O'Connor and
Andrew Schneider from the St Louis Post Despatch, by CARRIE TEEGARDIN
from The Atlanta Journal and Constitution, and by BILL SIZEMORE from
the The Virginian-Pilot. These have been published as a series of
articles in their state newspapers. The studies were done in
Oklahoma, Virginia, Illinois and Missouri. There are also a number of
other good in depth articles. This material is well worth reading and
I have taken the liberty of including a large number of extracts on a
new reference page.

What is clear is that staffing and care were
poor and remain a major problem. There has been little if any
improvement. Senior executives still quite openly run health care
like fast food chains. In spite of the large number of excellent
studies political priorities and political support are tightly wedded
to the corporate market model. Ideological economic beliefs dominate
policy. This is not surprising in a regime which views
anti-Americanism and terrorism in simplistic terms such as "axis of
evil" and "freedom is beautiful" - presumably President Bush is
talking about the sort of freedom in the corporate dominated western
world.

Information about individual nursing homes

I am often asked where to go or for recent
information about individual homes. I don't have this
information.

Many states in the USA have web sites giving
state inspection data about nursing homes. In addition most US states
have nursing home advocacy groups or elder abuse groups. These people
know where the problems are. The Bush administration in April 2002
claimed to have set up a web site with information. I don't now how
accurate it is. <www.medicare.gov
and through a toll-free telephone number, 800-Medicare
(800-633-4227)>. The web pages also provided links to state
sites.

In addition the following MemberoftheFamily
web site tries to maintain up to date information about nursing
homes. It is not tied to government or beholden to anyone
financially. It is a good place to start. <http://www.memberofthefamily.net/usmap.htm>

References

In analysing corporate aged care in greater
depth I have taken extracts from published material and allowed them
to tell the story. I have simply written a short introduction and a
few comments to give perspective and explain the context of some
extracts. Most of the articles are long reviews laced with many
examples of corporate business conduct and of failures in care. I
have tried to select short sequences and sections to illustrate what
I feel are important points or which reveal the thrust of the
article. There is inevitably repetition as articles give different
perspectives. The articles are arranged chronologically so that while
the content is disjointed the flow of events is revealed. Many more
references are attached to individual corporate pages.

The extracts on these pages are from
copyright material. They are reproduced here for educational purposes
and to stimulate public debate about the provision of health care. I
consider this to be "fair use" and in the public interest. They
should not be reproduced for commercial purposes.

Disclaimer: - The material is
selective and not all-inclusive. The extracts do not necessarily
reflect the full perspective of the original. Corporate denials and
explanations have not been included. No claim is made that all of the
matters referred to are true. The intention is to give the flavour of
the material and an idea of the extent of the allegations.

Because of the volume of material I have
put them into three web pages.